9/10 newsletter
*** Market
SP500 is pushing toward the 1240 high again, after a month of correction. Of course, energy stocks are well-known winners in this game. Texans and Canadians must be very happy. "Wall Street is testing how high of price consumers are willing to pay for a gallon of gas compared to other household spendings?"
My portfolio stands at +13.4%. If the bull pushes a little bit this year and survives October selloff, it could be making 20% by December. Then I will hit my performance target...
Government is going to spend more than $60 billion in Katrina relief effort. This is a good news to many companies. Especially it pumps revenue to construction, transportation, and companies with significant Bush tie. Why did not FEMA act? Because the money was not there (hey Congress!). Rule #1 of Homeland Security.
Large cap seems to catch up with small cap in past few months. The highly followed Russell 2000 small cap index fairs the same as SP500 YTD. But Russell mid-cap and S&P mid-cap indexes are still significantly ahead of SP500. This makes capitalization analysis somewhat difficult. You have to hit in the middle to gain the excessive return, not too big, not too small.
With all the stuff going on, the market is still favoring value over growth with a small margin. On the sector front, you have to be heavy on energy to glean the excessive return. But that will put your portfolio on a large cyclic risk, since industries take turns to perform from long history. No industry can shine more than 2 years in an economic cycle. Especially energy sector is a hedge against other sectors, since it is generally a cost, not profit, of most businesses.
--Steve
SP500 is pushing toward the 1240 high again, after a month of correction. Of course, energy stocks are well-known winners in this game. Texans and Canadians must be very happy. "Wall Street is testing how high of price consumers are willing to pay for a gallon of gas compared to other household spendings?"
My portfolio stands at +13.4%. If the bull pushes a little bit this year and survives October selloff, it could be making 20% by December. Then I will hit my performance target...
Government is going to spend more than $60 billion in Katrina relief effort. This is a good news to many companies. Especially it pumps revenue to construction, transportation, and companies with significant Bush tie. Why did not FEMA act? Because the money was not there (hey Congress!). Rule #1 of Homeland Security.
Large cap seems to catch up with small cap in past few months. The highly followed Russell 2000 small cap index fairs the same as SP500 YTD. But Russell mid-cap and S&P mid-cap indexes are still significantly ahead of SP500. This makes capitalization analysis somewhat difficult. You have to hit in the middle to gain the excessive return, not too big, not too small.
With all the stuff going on, the market is still favoring value over growth with a small margin. On the sector front, you have to be heavy on energy to glean the excessive return. But that will put your portfolio on a large cyclic risk, since industries take turns to perform from long history. No industry can shine more than 2 years in an economic cycle. Especially energy sector is a hedge against other sectors, since it is generally a cost, not profit, of most businesses.
--Steve
posted by Steve at 1:28 PM
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